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Business Climate in Germany’s Chemical Industry Improves Slightly
In February, the business climate in the German chemical industry brightened a little. The indicator rose to -15.7 points, up from -16.1 points* in January, due to better assessments of the current business situation. Expectations, however, turned somewhat more pessimistic again. “The climate in the German chemical industry is still rough, but there have also been some surprising rays of hope,” says industry expert Anna Wolf of the ifo Institute.
Improved Sentiment among the Self-Employed in Germany
Sentiment among the self-employed in Germany has improved. The Business Climate Index rose to -14.6 points* in February, up from -22.6 points* in January. This is a finding from the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). The rise was due to less pessimistic expectations. However, the self-employed are particularly dissatisfied with their order backlog, which continues to shrink. “This segment is still far from optimistic,” says ifo expert Katrin Demmelhuber.
ifo Economic Forecast Spring 2024: German Economy Paralyzed
Sentiment among companies and households is poor and uncertainty is high. Price-adjusted gross domestic product will increase by only 0.2 percent this year compared to the previous year. Next year, economic output will then increase by 1.5 percent. This means that the growth forecast for the current year has been significantly lowered (by 0.7 percentage points) compared to the ifo Economic Forecast Winter 2023 and slightly raised (by 0.2 percentage points) for 2025. Contrary to expectations, the German economy is in recession in the winter half-year 2023/24. In particular, a recovery in industrial activity will not set in until later
ifo Business Climate Saxony: Sentiment Remains Subdued (February 2024)
The business climate in Saxony deteriorated slightly in February. The barometer of business sentiment in Saxony’s economy fell from 91.0 points in January to 90.2 points in February, marking the third month in a row to see a decrease. The companies surveyed assessed their business situation as marginally worse than in January; they reduced their expectations for the coming months slightly.
Working from Home Firmly Established in Germany
In February, 24.1% of employees in Germany worked from home at least part of the time. This is the finding of an ifo Institute survey of just under 9,000 companies. “The proportion has remained almost constant for two years,” says ifo expert Jean-Victor Alipour. “Regardless of the debates at individual companies about returning to the office, working from home has become firmly established in Germany.”
A Small Dent in the German Automotive Industry’s Business Climate
The business climate in Germany’s automotive industry deteriorated slightly in February after a noticeable brightening in January, according to the ifo Business Survey. “However, with a value of -10.1 points, the industry index is still well above where it was when it bottomed out in 2023,” says Anita Wölfl, a specialist at the ifo Center for Industrial Organization and New Technologies.
Material Shortages Worsen Somewhat in German Manufacturing
Material shortages in German manufacturing have become slightly worse. In February, 14.6% of the companies surveyed reported shortages, up from 12.5% in January. These are findings from the ifo Institute’s latest survey. “In addition to the ongoing conflict in the Red Sea, the rail strike in Germany has also led to a shortage of raw materials and intermediate products at some companies,” says Klaus Wohlrabe, Head of Surveys at ifo. “Nevertheless, the supply bottlenecks are not a fundamental problem for industrial production. At present, we’re mainly seeing delays within supply chains, not a total breakdown.”
ifo Business Climate Eastern Germany Cools Slightly (February 2024)
The ifo Business Climate Index Eastern Germany saw a small decline in February. The barometer of business sentiment for the regional economy in eastern Germany fell from 89.0 points in January to 88.5 points in February. The eastern German companies surveyed provided assessments of their business situation that were somewhat worse than the previous month and also lowered their business expectations slightly.
Price Expectations of German Companies Fall
Fewer companies in Germany are looking to raise their prices. In February, the ifo price expectations slipped to 15.0 points, down from 18.8 points* in January. This was mainly due to the consumer-related sectors, where price expectations fell from 32.4 points* to 28.9 points. “This suggests that in the coming months, inflation will continue to decline,” says Timo Wollmershäuser, Head of Forecasts at ifo.
ifo Employment Barometer Falls (February 2024)
Companies in Germany are looking to hire less staff. In February, the ifo Employment Barometer fell to 94.9 points, down from 95.5 points in January. “With the economy so sluggish, companies are putting off hiring new people,” says Klaus Wohlrabe, Head of Surveys at ifo. “Even layoffs can no longer be ruled out.”
ifo Export Expectations Rise (February 2024)
Sentiment in the German export industry has brightened somewhat. The ifo Export Expectations rose to -7.0 points in February, up from -8.5 points in January. “The German export economy is hardly benefiting at all from current global economic developments,” says Klaus Wohlrabe, Head of Surveys at ifo. “There’s still a lot of room for improvement.”
ifo Business Climate Index rises (February 2024)
Sentiment among German companies has brightened somewhat. The ifo Business Climate Index rose to 85.5 points in February, up from 85.2 points in January. This is due to slightly less pessimistic expectations. Assessments of the current situation remained unchanged – positive and negative responses here were nearly in balance. The German economy is stabilizing at a low level.
Business Climate in the German Chemical Industry Stagnates at a Low Level
The business climate in the German chemical industry stagnated at a low level in January. The value slipped to -15.9 points, down from -15.4 points* in December. Companies rated their current business situation at -17.1 points, which is slightly worse than in the previous month. At -14.6 points, the level of pessimism in their business expectations remained virtually unchanged. “Germany’s chemical industry is still very much in crisis,” says industry expert Anna Wolf of the ifo Institute.
Worsening Order Shortage Weighs on the Self-Employed in Germany
Many of Germany’s self-employed reported that their order intake in January was too low. The proportion of those with this complaint increased to 47.9% at the start of the year, up from 45.3% in October. This is a finding from the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). “The order books of the self-employed are plainly melting away,” says ifo expert Katrin Demmelhuber, “and the resulting decline in sales is a cause for concern.”
Sentiment in German Residential Construction at an All-Time Low
The business climate in German residential construction has fallen from -56.9 points to -59.0 points – the lowest value ever measured. The same is true for business expectations, which have sunk even further, dropping from -64.7 points to -68.9 points. “The outlook for the coming months is bleak,” says Klaus Wohlrabe, Head of Surveys at ifo. “Residential construction is still facing the double whammy of a lack of new orders and ongoing project cancellations.”
Economic Experts Survey: Substantial Risk of Recession by the End of 2024 According to Economic Experts (Q4 2023)
As the growth expectations of many experts in the Economic Experts Survey for 2024 are below average, the question arises as to how high the probability of a recession is in the respective countries. The growth forecasts did not include a confidence interval, so it could be that many experts expect significantly lower growth rates in their countries in the most pessimistic scenario. Furthermore, even if growth rates are positive for the year as a whole, a country could experience a technical recession during the year (two consecutive quarters with growth rates below 0%). To assess the likelihood of such scenarios, we asked the experts in the Economic Experts Survey about the probability of a recession occurring in their country by the end of 2024.
Weak Start to the Year for German Retailers
The ifo Business Climate in Germany’s retail deteriorated in January. Both the current business situation and business expectations for the coming months clouded over. “Consumer restraint and a lack of skilled workers will likely continue to pose challenges for many retailers in 2024,” says ifo expert Patrick Höppner.
Lack of Orders Weighs on the German Economy
The lack of orders in manufacturing is increasingly becoming a burden on the German economy. In January, 36.9% of manufacturing companies reported a lack of orders, up from 36.0% in October. A year ago, the proportion was just 20.9%. In the service sector, the proportion rose from 29.3% to 32.1%. “The lack of orders has worsened noticeably over the past year. Hardly an industry has been spared,” says Klaus Wohlrabe, Head of Surveys at ifo. “What’s more, order backlogs are shrinking.”
Material Shortages Noticeably Better in German Manufacturing
Material shortages in German manufacturing continue to reduce. In January, 12.5% of the companies surveyed reported shortages, down from 18.2% in October. “At the moment, the attacks on commercial shipping in the Red Sea aren’t affecting the supply situation for raw materials and intermediate products,” says Klaus Wohlrabe, Head of Surveys at ifo.
ifo Business Climate Saxony: Climate Cools Slightly (January 2024)
The business climate in Saxony cooled off slightly in January. The ifo Business Climate Index for the region’s economy fell to 91.0 points, down from 91.3 points in December. The Saxony-based companies surveyed assessed their business situation as slightly better than in December; they reduced their expectations for the coming months slightly.
